This is a rush transcript of "Special Report With Brit Hume" from December 18, 2008. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

ED GENSON, BLAGOJEVICH ATTORNEY: First of all, I don't think what he did wa s wrong. Second of all, abuse of power is in the eyes of the beholder. He doesn't think he abused power, they think he did. And, third of all, this is no reason to impeach a governor.

And in addition to what you heard him say, he also said that this evidence, which is the transcripts, if available, of the wiretaps that were cited in the arrest of Blagojevich, remains unexamined by a court, it's mere hearsay, and therefore inadmissible in these impeachment proceedings that have begun out in Illinois.

Some thoughts on this case now Fred Barnes, the executive editor of The Weekly Standard, Mara Liasson, national political correspondent for National Public Radio, and the syndicated columnist Charles Krauthammer — FOX News contributors all.

A few days ago we thought — some wrote that he was at the point of stepping down. That appears to be a pipe dream as far as Rod Blagojevich is concerned. It looks like he may be with us for a while, Fred.

FRED BARNES, EXECUTIVE EDITOR, THE WEEKLY STANDARD: It looks likes he may be for a while for sure. And now he has a real character for a lawyer, this guy Genson, who put up a pretty strong defense, at least against impeachment.

And I think part of the reason is that it's clear that the case against Blagojevich is not airtight. He's charged with conspiracy. It's a case I think that his lawyer believes he can beat in court. So why should he resign?

And when you see the people trying to get him out of office quickly it's pretty — they are desperate. They are so pathetic.

When you go to the state Supreme Court, as Lisa Madigan, the attorney general, did, and try to get them to rule the governor is disabled in a law that's supposed to deal with mental or physical problems, not political ones, and they say no, without comment, just brushing it aside as if it was a ridiculous appeal, which it was, you know, that's pretty telling. So I think —

HUME: But he did say, his lawyer did say, that he isn't going to make that Senate appointment.

BARNES: Yes, but that's not what the governor himself said, only his lawyer so far.

Look, I don't know whether he's going to do it or not. But don't count it out yet.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: What his lawyer said is the reasoning wasn't going to make it because Harry Reid wouldn't seat whoever it was who he picked, so there was no point making it.

The legislature has a couple of different jobs — one, they want to get Blagojevich out of there, which I think is going to be pretty difficult, and they'll have to do it the old fashioned way instead of trying to use the courts to get him out.

And, two, they have the problem of replacing Barack Obama. That, if Blagojevich isn't going to do it, it's very possible they could pass a law that would either give the powers to the lieutenant governor or call for a special election. They'd have to pass it over his veto, if he vetoes it.

HUME: He'd have veto authority over it.

LIASSON: Yes. But maybe they could pass it by a big enough margin.

So they've got two big problems.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: You've got to love this story and you have to love this state.

We know what the governor's like. But here you've got the attorney general, who supposedly is the good guy, on the side of truth and justice, who brings a suit that is not only ridiculous, but is lawless.

The idea that the attorney general should strip the governor of his powers on the grounds of disability, as Fred indicated, in a law that clearly is aimed at a guy who is in a coma, is what happens in a Banana Republic. Presidente is disabled, and all of a sudden he disappears. Or Khrushchev when he was deposed, it was announced that he resigned for reasons of health. It's not supposed to happen in America, but I guess it happens in Illinois. And look at the House and Senate in Illinois. These, again, are the good guys.

So they're trying to impeach him, knowing that, as his lawyer has indicated, all this stuff is hearsay, it's all in a complaint which, obviously, is brief on behalf of the accusers with nothing on the part of the defense — quotations out of context, and no capacity of cross- examination. So they can't use that in impeaching him. So what happens? They bring in a witness today who talks about nickel and dime stuff he's done in the past. You don't impeach a government in any state on nickel and dime stuff. It's an invasion of one branch of government by another, and it requires a very high standard.

HUME: Let me just ask this question though. When he seemed poised to make that appointment, you can see why Democrats would be frightened of that, and the scandal that would ensue and all that.

If he's not going to do that in the near term, what is the political harm to Democrats, both in the state and nationally, of having him sticking around for a while under a cloud?

KRAUTHAMMER: Well, the state government is paralyzed. He's not a guy who can act with any authority.

HUME: Right.

KRAUTHAMMER: That's why impeachment in the end is the only way, because he's going to hang on to his seat. He knows it's all he has.

HUME: It's a bargaining chip.

KRAUTHAMMER: It's a bargaining chip. And once he gives it up, he's a pauper, he's outside, he has no infrastructure and no defense. So he's going to stay in there until the last dog flies on him.

HUME: For the national Democrats, is it a problem?

LIASSON: Of course it is.

BARNES: Absolutely.

LIASSON: Yet another corrupt Democrat that Republicans can point to and say, you said we were the culture of corruption.

HUME: But how many times can you point to Blagojevich?

BARNES: This is a big story. It wouldn't be that big, but this is appointing a senator to replace the guy who is going to be president. It's a worldwide story. And it does hurt the Democratic brand and will continue to as the story goes on, for at least a couple more months.

HUME: President-elect Obama prepares to name his new trade representative. There's concern over just how much focus the new leader will be put on the issue. The panel on that next.

(BEGIN VIDEO CLIP)

PRESIDENT-ELECT BARACK OBAMA: I believe in free trade. But I also believe that for far too long, certainly during the course of the Bush administration, with the support of Senator McCain, the attitude has been that any trade agreement is a good trade agreement.

And NAFTA did not have enforceable labor agreements and environmental agreements. And what I said was we should include those and make them enforceable.

(END VIDEO CLIP)

HUME: So that was then. This is more recently. In an interview with The Chicago Tribune Barack Obama on trade — quote, "I've consistently said on trade issues that I want environmental and labor provisions that are enforceable in those trade agreements.

But I also said that I believe in tree free trade and don't think we can draw a moat around the American economy. I think that be a mistake.

My economic team is going to put together a package on trade and worker issues that will be presented to me, I don't want to anticipate right now what sequences will be on these issues."

He has apparently identified the man who will be his trade secretary, if confirmed, and that will be the former mayor of Dallas Ron Kirk.

And Major Garret was saying earlier today that the trade representative is likely to be a less prominent figure in this administration given the president-elect's attitudes that has been true in the recent past.

Charles, your thoughts on this issue and this president-elect?

KRAUTHAMMER: As we could see in those clips, he clearly is of two minds—on the one hand, on the other hand. And I think nothing will happen on trade in his administration.

It's a very low priority. And the split in his own position you see in the administration.

The high command of his economic team, Larry Summers and the others, are deeply committed to the idea that free trade works overall in the long run, and would go ballistic if, for example, Obama initiated a renegotiation of NAFTA. That's not going to happen.

On the other hand, Obama has a strong constituency in labor which is opposed to any expansion of free trade. So what's going to happen is nothing is going to happen.

Obama will be in favor of it in the abstract. He'll support the great big international agreements like the Doha round, which is one that involves a whole lot of countries, knowing that nothing is going to happen because Brazil or other countries always veto it if you broad agreement on agriculture.

So he'll be committed in principle, nothing will happen. But on the stuff that you can really accomplish, bilateral, which is bilateral-an agreement with Colombia or Korea or others, he will not act because it would anger his labor constituency.

Ron Kirk will be the un-busiest man in the cabinet. He'll read a lot of novels over the next four years.

LIASSON: But Ron Kirk is a free trader. He could have gone a different direction. I think the USTR pick was one of the more revealing ones.

I agree, maybe trade won't be a top priority for him, but the bigger question was is he going to do anything protectionist in the midst of this economic downturn, like renegotiating NAFTA, which he once hinted at during the campaign and then has backed away from since.

I think Obama is someone who resists taking a hard and fast position on any issue unless he absolutely has to. And I think — Ron Kirk is not known as a kind of protectionist, you know, labor union person. He's not.

HUME: Is he a trade person at all?

LIASSON: No, but he's from Texas. He's pro-NAFTA.

The other thing is that I think that the way this cabinet is shaping up, Obama has definitely given the left of his party a certain number of positions, but there have been a lot of signals that he is pragmatic and very centrist. The choice of Rick Warren to give the prayer at the inaugural— he's a mega church guy from California.

(CROSSTALK)

LIASSON: That I think is all part and parcel of what he's trying to do.

BARNES: I think it's clear in this administration-I agree that he's not going to do anything on trade. But the free traders have won. I think The Wall Street Journal had a story today saying he's naming Congresswoman Hilda Solis, who is opposed to NAFTA, to be labor secretary, and that conflicts with the USTR pick Ron Kirk.

But labor doesn't matter. You have the trade representative, you have Larry Summers, as Charles said. These are the people that are important and will be the number one advisor, economic advisor at the White House.

These are free traders. And I think their advice, I've been told that their advice has been, Summers' advice has been that to labor, give them card check. Support them when they try to get that through Congress and sign that bill. But don't give them any protectionism on trade. Leave that completely alone, because the economy is fragile enough, the world economy.

HUME: How much could the economy benefit in the near turn if he put through — the agreement with Colombia exists. It is before congress. Congress won't act.

So is the Korea trade agreement. That's the one that caused demonstrations in Korea today where there was trouble in parliament where they were battering the doors down and shooting them with fire hoses.

But how much would they benefit?

BARNES: They benefit —

(CROSSTALK)

HUME: How much benefit could there to be to an ailing economy in the short run?

KRAUTHAMMER: It'll have a big effect on Colombia and Korea, a small effect on us. It's a foreign policy action that's not really in terms of America a truly important economic action.

But on the big stuff, nothing is going to happen. You're not going to have a regression nor an advance. It's going to be stasis in free trade.

LIASSON: Even if Obama wanted it, these big trade agreements are so difficult he might not going to be able to get it anyway.

BARNES: If he went for those treaties, those would be a great signal to the world that this will be an administration that is aggressively in favor of an open world economy, this globalized economy. But we're not going to get that.

HUME: And you're confident, by the way, aren't you, that card check is going to go through and will be signed?

BARNES: I'm not at all. One of the Democrats, Senator Blanch Lincoln from Arkansas, who voted for cloture to bring up a vote last time and supported it in 2007, said today she's against it.

LIASSON: He has promised to sign it.

(CROSSTALK)

LIASSON: He was an original sponsor of it, actually.

BARNES: It will be a very close vote on cloture and losing her matters.

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